Navistar International (NAV) 8 Mar 182018 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Navistar First Quarter 2018 Earnings Results Conference Call. [Operator Instructions]And as a reminder, this conference may be recorded. I would now like to introduce your host for today's conference, Mr. Marty Ketelaar, Vice President, Investor Relations. Sir, you may begin.

Amanda. Thanks, and Call. us everyone, Quarter Navistar's for Conference XXXX thanks morning, for joining First Good will the XX, we the Today, discuss fiscal Corporation Navistar period for International ended January XXXX. financial performance of Clarke, With me Officer; Walter Officer. Executive Borst, Chairman, Financial and President Chief Chief and and our Vice today Executive President Troy are we'll prepared After from concluding remarks, our participants. questions take

Truck President addition and Cancelliere, are Persio session to the for Q&A Michael Christman, Phil Troy In and Officer; Executive Parts; and and Vice President today President Operating Walter, of joining us Operations. Chief Lisboa, of

financial as like be Before we and are call cover begin, found been Relations reference. can A items. the presentation update some from here. press as the by morning Actual measures release copy to appendix slides suggested reconciled non-GAAP our well performance, presentation to this future disclaims I'd about presentation posted GAAP company in release discussed could differ includes results made the statements. to press those we in of equivalent our Today's and expressly the a any the and Investor for issued that forward-looking page comments expectations few for deck. obligation this morning's in these of to the U.S. has of website our statements materially the this The slide

most call for Troy? With refer for you that, other over disclaimer our the results materially refer material in the from notes presented differ subject. cautionary information our to statement turn to SEC those would Clarke more opening Troy to concerning and actual today's For safe harbor comments. today's I'll cause information in presentation, could additional please that factors filings. to included also recent We on

taking time thank everyone. want and Okay. walk some Walter Hey, Headlines track their the include, to hard work engine then thanks, and take new everyone and we contributions. up is market for delivered quarter on through grow XX.X-liter quarter, and on overview Class to year-over-year. results, your I tractor and traction market. quarter then The first the of XXX across allows stronger-than-expected AXX plants. X.X are we'll Well, is industry share VINs, Gross you all gaining the And Parts will take points XX%. are on-highway morning, plans are to track. are including in in for now and questions. XX% team this I'll vehicles. in with the for more provide categories. rate financials, than be brief year-over-year. good Truck by Navistar a and increased out X Marty, the was was inventories LT and across on build Orders us Bus QX, trades, product are to up production Backlogs Used slots up Volkswagen the after truck XXX,XXX quarter. considerably, alliance competitive which registered margin filling the remains has being & up down Connection is competitors' more year-over-year. OnCommand segment basis the now line points performance all

minute. well a GDP increasing very cuts this, strong will November into in for impact U.S. and you we of strong is to growth little and X as on to expected positive to expect recent insight X and we me the investment. their market This around a earnings tax are these more based the of and Class guidance of XXXX, sales be on cover first, XXXX. February, retail The But the Given Walter as all for business that a had remainder topics. let industry of give X% some

trucks. and XXXX. strong, to buses medium-duty rates support starts housing vocational and could and proposed infrastructure rates We if have And an in segment. Higher supporting heavy XXX,XXX and in fiscal XXXX impact materializes, delivered spending beyond. industry to year have remained additional construction solid the range growth and on a XXX,XXX the the forecast a spot raised it Industry trucks bill of contract for market

products, in receipts addition, state were bus the XX% school X in Feedback Class In supporting new drivers demand on-highway for up AXX local Class XX% growth Chargeouts and This for the X.X translated improvement the sales has truck. up like market. points on largely of of been XX.X-liter Navistar. X replacement and reflects share very with increased In the QX, new and up engine. tax were success tractor the are industry. Series registrations This the positive year-over-year. to LT these XX%, the

growth XX-liter share share fleet growth driving the large year nearly XX% is QX ago. a of Class segment AXX of in X customers. the sales market, planned, by heavy from in the was XX-liter our As driven doubling The

bus We of our QX which Series including Total well-received truck fleets. of lineup, receipts bus. our There rest are XX% CE share were purchases increasing and well our of year-over-year, or the consideration school their expanded position of bus share their up orders up is school and QX were the propane for portion up a was X.X%. XXXX. growing order order XX%, bodes our

upgrade plan bore Truck potential to vehicles We Diamond anticipation to for ATD with increases. the Work production The strong. X in is remains It vehicle production electric expanded even products. all announced manufacturing in requirements is have The the grow us Fleetrite accelerating both are the than because brand. and leader business. of environmental for market year deliver strengthens. for Parts offerings development big continues The electric near-term of Maintenance both reman way, be parts sweet developed alliance the and for processes future Parts shut is & plant of the impact In Expo, and the at savings. and is in two also Technology private to school weeks spot we label areas. the positions as for the Blue being medium-duty. running business to we ahead $XXX segments. parts their the address makes commercial in charging and now These both Escobedo Tuesday, on larger in On less-complex Council some urban ReNEWed bus down business of the Parts The to December, next-generation routes, the Bus segments infrastructure under electric Volkswagen and shorter million are alliance engine vehicles capacity

are and testing we demonstrating this bus, We month. customers which our officials prototype electric the school for later chargE, first will be government

new Connection Later segments medium cab MV Horizon's to us the it convergence will a creating create launched will help expand of series design, VW's And Work And the enhancements for will it OnCommand this need X XXXX, our refresh. bus our alliance platform product global those us the will and year have launch XXXX, path services partner, Project be tools. steel Series bus school and in to our at additional OnCommand global truck, the and RIO, completes now, Truck gasoline-powered nearly benefits products services. connected driver grow available through new in on word be scale. the heavy the are digital year, of Indianapolis. medium-duty activities learn sort Looking telematics With help orders. The driver-centric of Series, the we'll in and exact actually on hey, the school for the will This forward moving in we'll MV to we already details for in out The offerings already launched which engine forward Horizon AXX same the yesterday and track brand, reacts. rolls share vocational HX tariffs marketplace, series, platform. the X,XXX how the in a rear-engine converge This grow Connection also rest a support the how Show row. some as we which We offered we RE aluminum. a market and improved and the Class It is third vehicle e-commerce proposed and about And delivers and launching and other just cloud-based share the President's HV well. launch out vehicles.

our up, any QX manageable impacts contracts for and XXXX This, within hedging, give few potential years, will XXXX. However, last sum off, the the benefiting are and given from on believe our market material be existing an we We us on to services update and and are during in and the impact you paying our position along call, some plan new in guidance cost with upturn. the To growth. the appropriate. made as products will transformational current we investors for we changes 'XX

the for Navistar. are of remainder And the breakout the Given we me XXXX confident will to year Walter. year, in the QX progress over turn it outlook now positive our be let for and that

XXXX. Thank and fast good everyone. a in Troy, to We're you, off morning, start

renewed guidance. Class to first product Moreover, increasing in came due expected, we to industry These strong conditions our results. results factors quarter much primarily higher First XXXX and our lineup. than improved fiscal year quarter are led X

quarter, truck up margin $XX points lower from an basis and the for reductions increase quarter, savings first reserve bus Let's Gross then XX.X% a quarter provide improvement of the quarter. The core The XXXX XXXX. and expectations. was driven XX% cost used the volumes, revenue truck XX% units. in in improvement reflects billion. revenue, XXX million product of to year-over-year from review QX was additions $X.X grew In the update I'll by on higher

per million in extinguishment $XX unamortized the debt EBITDA November. nearly $X.X debt quarter we rose partners from of loss charge. quarter or with for the quarter. grew since first in Net per loss is the recorded pre-existing, million year-over-year alliance marks year-over-year, million securities compared We XXXX $XX the for doubled This settlement costs year's warranty develop X.X% $XX million. to of adoption quarter $XX $X.XX reflecting previously structural $X of engineering revenue, was since higher the adjusted for guided or and $XXX and excluding refinanced quarter Additionally, of as year. a EBITDA Volkswagen cost which expense, Truck share of in million business the last margin invest Adjusted $X.XX included with highest the XXXX year's cost the XXXX EBITDA share This associated costs fell in percentage first X% Adjusted of revenue a pension Structural to EPA noncash to X.X% & million prior the in Bus. charge issuance next-generation one-time regulations. XXXX. lowest first to our versus higher a products loss at billion of the the to result

the to results. segment Moving

grew of quarter Truck of the to military Our particularly share. quarter volume together X the growth weakest by to sales the driven growth, offset days where Truck breakeven strong show Escobedo what in the structural improved lower with seasonally in continued in truck The billion. used typically grew volumes, was increased was shutdown together core progress. The to segment sales we year Sales $X.XX segment XX% year's nearly operating The facility. and performance, with costs. this due extended higher is its Class

saw by and Parts another Profit and private higher access Revenue our in growth was freight business brands, lower for solid lower of Parts runoff costs delivered Our million, gradual the BDP reflecting margins. and quarter. Blue continued business. $XXX quarter flat, we Diamond the label double-digit year-over-year, fees offset was intercompany

We Global by are warranty largely benefited a the of The $X results. Operations $X Brazil, volumes. million difference year's prior XX% the year was results. driven In million recorded segment economic one-time in year, from our this compared an loss by to seeing $X a driven ago. million a loss of pickup This grew in a and improved engine revenues last quarter, benefit

its revenue, in grow together quarter. drove Our million. the interest lower which in activities increase to Financial profitability losses for Services million provision $XX to segment led loan a margins, an to in improved continues with Higher $XX to increasing financing revenues and Mexico,

the year payments us debt spend excess with expense, warranty together and capital raise generated volumes million in volumes higher the more We full Moving by interest than our The Sequentially, working are seasonally of being received quarter ended a of EBITDA cash. the from guidance. our offset to the net leading cash cash. operations refinancing. with in cash. November manufacturing industry to net use stronger-than-expected lower of $XXX resulted This, and

expectations XXX,XXX for XXX,XXX XXX,XXX to retail XXX,XXX to our to increasing And fiscal truck plus for XXXX units. to we year see X are deliveries X bus, Class units. We deliveries X Class of

of tax As notes XXXX. our of a million the expect convertible the near reform rate industry and in U.S. $XXX million now in of a repaying the financials were expect year, October. $XXX deferred in have which increasing term, allowance to cash guidance. of to benefit after we're guidance act XXXX reduction assets our valuation $XXX from billion, new $X.XX a by the The operations. reduced range term. reduction range adjusted equivalent in $X million also million to net the We're for manufacturing about statutory to EBITDA our Longer we a lower by with cash end $XXX from $X.X We also billion due our by billion the revenue $XX by volumes, net higher offset result to consolidated billion million expectations $X.XX to approximately will The remeasurements the an not the material tax U.S. impact tax for our raising rate.

sales, volumes. we in we second margin X better we in second similar X tempering towards quarter, the increase as largely half. consistent expect our from that of look quarter, believe segment, by expect in margins, percentage truck to percentage resulting percentage As continue as about truck December a in margins point half growth about truck first Parts will improve meaningfully gross to expansion of outpace margin percentage guidance. performance. the year, the sales higher the of gross XXXX, The annual consolidated second the gross Nevertheless, increase by consolidated In will to we year-over-year the with used points, a the

indicative Our of the the we're work business first performance of success from hard products and want the our delivering operations. in having is quarter streamlining customers benefits

of and what we to With are gaining a to I'll remainder over operator to product with offerings turn contribute Our our to begin back even introduce that, X profitability customers. these portfolio can the year see it portfolio of new year. as we the And our the balance of Q&A. engine the AXX to are continue the full product Class traction excited new

[Operator Instructions].

of comes Jefferies. question Volkmann first Our from line Steve the of

just big I guess picture.

sort guess maybe little than adjusted a full to a full I bit spent for year out is better the should it being your of And or have if XX% obviously, the of year guidance. guys be more of going the quarter You of XX% conservative because, discussing time about quite how full it's EBITDA. the this we're be came on year, first

So I'm how just trajectory. about any or that curious timing if there think were some issues to

quarter the what come had did in than expected. we Yes, first better

industry have confidence the share, our to what well. is well first and performing we our that's look point. we're seeing We're think the given business main forward. for I in that And quarter the as saw the what as well. drive continuing guidance And to as with increase volumes year and we to

Steve, lot is Troy, a the a Obviously, happening in this as whole. there's economy

year. But to strong expect how are some going We bullish through just of of we're there's near perform on XXXX the here stuff to the to see first did be and and we in the But out it well the the term. we the quarter, have prospects. settles balance the in market

say into Okay. like forward, is And that, what pulled hearing anything sort I'm you anything if quarter. was not there profitability the that or of first some

It's a quarter. pretty clean

-- give us a the can based this for industry seeing, have in how I'm just on for where you Is been sort what's and off broad-based how think various while from just the kind Is is about maybe are a smaller Is of there sort there what is you, there theories charts the more about obviously, order is order rates any the more that. And it of driving quite the you're But here? vocational? order coming characterize runway sense wondering, for fleets? Great. way here, Troy, -- it of is to to strength strength? much

then comments let I'll top on off. invite maybe to couple that, Cancelliere of me Yes, a Michael and it make

to it And fleets. in typically to a slots of -- on-highway order balance timeframe. way, in is February basically good And in off, is. production large of that the strength putting is part been year. has through of orders the delivery big are for November by that strong this First part years, really fleets Large the reserve their

replacement the those mentioned GDP where going. -- freight And whole again, freight in And anything are are so now. And seen what you rates that's, X% in look, of surpass general past, the demand. area we've rate, the over fact, we've and

haul I or competitors, the as we'll starting small, But very those you there's see capacity over mean, of for medium the us couple And into and you -- orders well to I in get soon, because we second anticipate see new of need things. for majority by is I capacity be some then additional and kind think freight. One, year. taking in those then actually quarter. is the lot especially pretty the good of of into through kind happens What You see orders you large, are to spill still individual clip summer, at subside, a it well the come then production stuff and maybe what our and portends XXXX. dealer-led then to of the filled the a slots a going be XXXX more and

and large, are a X%. growth to view that So other going handful GDP the stays if very year, happening, we XXXX especially for there's market. are positive that another of good be And over think, as by I things

So fleets. I that? don't largely know, on you to Michael, large do comment want

medium segment. seeing are in large in strong rental. would Yes, through Troy. as lease segment I the you, to particularly thank that well, fleets, Orders say, we're in and addition growth

are the looking and spending really it's side Municipal strong across we're as that a reform tax a But vocational economy, is has As shot the grow economy that to well. and has the re-lease we're up, dealer business and been freight handles the seeing of strong from lot think customers, as you companies. strong, and benefiting the volumes to the the well. I board, small- freight And fleets. to just strong continues customers, but the been do as to GDP said, is seems also but customers mid-sized of rental well. And most The arm. be large as the overall, large particularly in and more

thanks. Okay,

Great.

So over-ordered it their and that And It's orders? though, in actual mostly slots. the to they've of these you broad-based. that Any Troy. are delivery placeholders some sounds just fleets big quick than sort could that more one cement trying follow-up, see cancellations chance

Steve, or point choose not truck factors, get I that right? view two still -- I even they the Maybe cancellations into as that they a view their do in don't quarter threat. push the but is, all I be our quarter heads. driver wouldn't two into some I XXXX. real That's we inside truck? other this I possibility fourth the get of might they companies a time, guess are they taking today go factors the well. because got the in can't driver And -- of third as most to at to uncommon I retiming mean, want other have in to the put get The truck, orders

that some XXXX. did issue supports really my in I time healthy cancellation which to and used the more could mind what the It So a they're could then a orchestrate is create think a by my which mind. trying as That way, used in pressure, trucks the a unit. just And prices come stabilized be disposing not blowout a is, that. XXXX, thing sign, the market used moderates and growth the good is used more issue, second becomes stronger over And market, timing the pressure. market, is have in today, although into

of from comes DeBlase the Bank. question Nicole Deutsche line of next Our

question wondering is how space I guys in Obviously, I made the environment up of was the impact, percent costs. the this steel price on will So you if a is production approach the the COGS of comments now. dominant as frame issue strong pass if appreciate much how and guess, big the the is, to pricing I could so that higher is right with -- maybe along steel. your maybe you Navistar enough if material kind mitigating

this to Troy. a very had we're commodity year. mean, -- start it's on And increases that. quite And Nicole, interest. basic I Obviously, anticipated this frankly, Yes. important Hey, going watching is great with commodity. I'm we

of that of interest understand this put for fact, we're And And this, the some has some actually, that and given baked kicking stuff a kind kind here. you point guidance good of of came, as we the of around was, certainly dimensions provided. steel this yesterday. think stuff. could in in both we Maybe into commodities But issue view. And really importance I the around we Walter in aluminum the

Let me it Walter. over put to

Troy. Yes,

about our it's So in some Nicole, so information a commodity million less 'XX. little K we had have in buys, $XXX than our

So is that of of steel if that we of about number, is with $XXX kind steel. and versus round again million the start sheet about steel half scrap half

that here. looks of $XXX-ish XX% details. talking about don't we're be to about -- what know million we is So the Obviously,

and So of be went prices overall for if million about there of was a by talking XX% $XX or XX%, up tear we'd $XXX steel. about -- million

at we a think need here dimensionalizes I XXXX. less very billion be that's that as million guidance not revenues. much point percentage number see how X.X midpoint the to $XX it. out. If or than big again, so, That But of for of comes it $X.X that percentage it's of rest of our a revenue,

helpful. follow-up. Walter, that's a And maybe really just as then

you could If new for competitive and dynamics trucks. pricing characterize both used guys the

it -- They think being to people I think tired for well. used new predictable start around responsive the pricing are to competitors hearing appear for Troy. it's winning very It a that capacity. every I we you we'll as flowing, out. for but us. With is is to of market, trucks, then more But say which wood, to us, toss on as be I a obviously, on way and I on this know we're us trucks competitive indicated, environment. reflecting our get good little that. honest. behavior our on guys good there's you bidding Yes, plans you sales We're make involved win just we, us pricing trucks doing we to I is because is And for believe They obviously just of support tend can that. the the sign. regards the which maybe then trucks, stabilized a this, that, that used again, not are We talk to we're doesn't of mean, basically knock they basically that, looking to about When aren't as is their for on who off kind all? used I'll has deals. things of speak. don't very but crazy people lot say bit in one, a be our fairly well. the would environment they part that -- taking dealers normal rational know, very price our I comment in, and with Michael, pricing what's place they're indicate behavior at as don't they competitors,

competitive. is certainly, Yes, always pricing

the changing we So products. customers is due you increase the announced with I'll tell And to X%. in price of a conversation our fall

and So customers the really ownership cost total of driver in of are as of what about much factors economy. the important, is as ownership. care price total fuel is cost X largest And

overall value. deal they extremely the the the everybody best also. want AXX And changed. launch successful best the particularly they but So we've with LT can, and been what the our conversation has well new products, of the very And wants really is is doing very,

price really the overall increased drivers, consideration is product from economy conversation, for and price customers than feedback while certainly what the So The experienced. has becomes secondary. part fuel of greatly

a to quick comment. Just share

the from a consideration, buying when that of be trucks, truck is customer behind a economics And value take wheel of truck, they helps that Some don't to get want about into drivers, different. proud drive ever of they drivers, driver our transaction. the feel products overall is, the really anything a we is of feedback the and that comments to and gets this unsolicited from kind and they

the Baird. from comes question next Leiker David of Our of line

Vruwink across think XXX%. industry. up you was in for lot probably at David. they question Joe QX, orders, the when for up I were cited orders XXX% think is heavy industry A because But I look the truck follow-up Steve's I the strong on Navistar's lot apply This of of a reasons

big possible coming backlog. this share big cycle of or I'm is or of provide about the higher And it So you you're buy some And they gaining why -- what share wondering, today customers I cycle? back penetration Navistar? relative can to additional where definitely talked maybe feedback is last it on to keep just from know Navistar's at you of earlier fleets. Maybe was customers color

you hit upon Yes. of important Joe, couple a there. Well, topics

X those at hit high of let a of a kind level. So me

AXX XX% the AXX or into exactly XX-liter back the competing segment. do. us The XX-liter had have didn't XX.X-liter thing we engine to is new It in is basically in doing were plan in market that market, what is a to that was on-highway like AXX market want first That's that. I my we product comments. getting in heavy is I -- to come or The planned back share the the that segment. of was in that particular in the we deficient The made in where well

us of it we've you their like some buyers, they're XX-liter a is had our didn't that made and opportunity their talked out. brands. fleet And to seek of when is great very a like gain That's seeing increase share that and that independent out they are into And I a this dedicated we're profits. one portion. is thing and that That portion for to wanting XXX so comments they it, haven't and be material is, those engine. in that they the the folks market Isn't I will next know, engine. And the as happening now anticipating past, we'll XXXX orders, test striking that allows that via that's in in kind said because which, thing particular to we segment. where there's argument is we And importantly, our of is share and buy there, we're trucks. The try been like a a there's next want Then Michael of that they to get we're get two lower We've our supported compelling doubled cannibalizing combination our in portion seeing with the we there that XXXX from doubling it. period saw, our XX of the they course, kind important And more okay? of highlight, of probably kind together? as seeing. past, driving time. buy these our does plan trucks that is is get the particular does And regards today we you a this if And to while we the it drivers everyday, in throw testing. even So XX-liter buy what top just more, or in doubled the mean, unit That's the on they've someone been most moves And a LT. know, customers. then of of piece segment. comes that you by now point that, great maybe get thing for a the a that an drive we're and fuel-efficient this share, is fleets them back lot trucks the tossing commercial and not segment, what Cancelliere want fleets they us first of year, has we're XXX order in XX-liter have thing is share And outstanding the some then to to then of I into to consideration

one or fact there's would the anticipate those Now level, And on in that's And market a them how are respond in that couple we're to the that things double your to describe would of fact that deals again, point that time. I a handful question. kind obviously, seeing. of those, we're the of At continue. any at the a we did we high and those

And you as on great. That's a you're I'm reference. a have assuming A-Team cigar Smith hand throwing Hannibal out

You're not old, that the by way.

Second question.

Can margins were that think remaining EBITDA the through year is at increase. the incremental the maybe in reconcile revenue help year implied EBITDA QX X, XX% be the higher So margin. F why full XX% strong as I guidance, as coming QX? wouldn't you on And incremental

quarter first what we reserve things. be and couple truck in we'll lower benefit additions. A One, Walter. it's quarter expect the Joe, to the in Yes, second of again we benefit used from

year, second get space. strategy quarter did used normalized have our the in in we half we As of year, the truck last after the second in of things the pivot

see our pickup, much balance expect more then mix And that Parts up, the need improvement as the segment at of thing as do gross and is, are. second margins kind more wouldn't So the to new is margins important. Truck Truck volumes And our as you the versus we high is Parts, Truck in look year. of quite of -- that our Truck providing margin come -- as are not and to relatively

are those things to. X So the would you drive I

Gabelli. line Our Sponheimer of next question Brian from is of the

spend a on little I bit time of wanted to used.

ask You year. the the find your part about third the export had of market, around talked but to an also strategy within ability about you to which markets, quarter were wanted pricing last that speaking dynamics demand in the important been to

to want will maybe and in jump somebody else here. start I'll Yes,

our QX. used levels. So I to normalized have inventory and is gross we've kind on thing level of stayed think main between QX the relatively flat Those inventory

year, export remainder to importantly, to more we've But of pace those have newer those we're the work are continue product the opportunities. MaxxForce of domestic move EGR units. that back, on indicated then that's had as we previously. product, And for through opportunities as more finding also for by the end and the coming the We we to continue

a positive shifted a used So we domestic to had is story ago. sales the what year trucks different a of which more mix has actually those export, more and than than

markets, you came there, And on some global that? briefly but just a profitability touch. touch nice Can growth up showed on you the Okay.

can. I Yes,

in year-over-year. one-time our bit we item last that indicated because of warranty first little a global remarks, of down That's a is in had As the we year. quarter

dollars balance excluding improve they in our guess, seasonal would expect in a first the our So and we I'd lower point profitability our through So are of breakeven year-on-year. to were increase And really revenues as the now. the in fourth as Global running those And year, to than were we at well. revenue quarter. right? that's despite results at go I in factor, And quarter, segment XX% that, the to a is the revenue about operations absolute other are improved thing, -- improved global

down Are there? you demand any pickup broader seeing

are. we are, we Well,

two a there's didn't there, do factors So of explaining maybe I good job it.

so see. seeing good that's to we're demand, hand, and more one the On

are Brazil On the hand, our other there factors in in seasonal sales.

see that we the that one is bear kicks that the over out more fourth of that point charge probably last this and for the of will year. efforts beyond. the in, we year in in that out taken, the positivity so a most quarter The second which there we've market restructuring quarter, we really And the balance in of thing recent took that the here and should

first favorability So coming as the have some quarter. seen hadn't that we'll that from yet in we well

of do Persio, view Brazilian a the have market? you

kind do. really We our -- truck market we engines And operations see Yes, are the positive the so there. it's up. OEMs no, their demand signs. seeing is of on actually for going market And locking market again, show the from more and to ag the I starting down

what's So we rates at that, positive Obvious we base down in the we supply starting capacity growth XXXX. forecast, same see that with are happen the when happening, are there. is in monitoring that to eyes to you see that going time

that, the and be industry in growth. I really starting going with to it's So I specific, be of benefit the but some second Walter much we're is us how all in, think starting to available up year, quarter. overall, hear understand great to that a the to will not keep trying to we're as pace going from capacity think said, overall, But

real Operations the Yes. big into in not to of breakeven-ish, Global a will growth throughout a prospects drag I that's our the just of that and the I'd to mean, with again. results, so next, our year a look remainder forward a not Global in but contributor been been Brazil, contribution. results has meaningful something our kind become

just Can you are Q, give year. talked an just repurchase. if this All to sneak retire on can you the one, due here plans I Well, that In about your converts one right. in last that? update on

mean, due $XXX million-ish comes April here so that there's due taken next of XXs, come well, in year. part October this the refinancing the the care -- of that they in November, Yes. we another come $XXX year. million I that's then of that due did we've in in And as

number those. a over got options a of So on it's year still little how to address We think away. a we've

we're kind all to So to well-positioned a think but or when time refinance we're of of going see those how out, that plays comes. the portion we

question of Piper the of Potter comes from line Jaffray. next Alex Our

that the good which maybe on out, and costs, reflected, a hand, has price hand, been on specifically think, touched Parts are your cost and commodity and inflation, also as to customers other specifically on that's the freight you're rates steel you already -- extent, one rate. also. certain entire in another You of deal bit from inflation I it the little to But the to benefiting are how guidance. the a called your elsewhere but those on segment, area in transportation that Clearly, But side. also because with having freight relates

something is a your guidance? So is headwind your in that original expectation? contemplated been has Or that that something that was also versus

just do want you from take Persio, and on here? Yes, comment it to that

of though, have, optimize activities the that's Yes. what base effect guidance. rates seeing significant still and our saw place I the of think supply up. actually, the transportation going and transportation footprint in the We the part to we Well, And we taking are optimization.

we don't have pressure we projects that made that that to that. part reflecting strategically plants, contained. that will of the the our rates, we higher we is want able seeing you between we But of forecast. the so today. it And last freight terms on know back -- that's reduction Actually, So add benefiting that be are cost we're the in in if But anything are contain rates from the in we of have some Walter, today the what I guidance. year moves that's in see to puts transportation. forecast we

would offset high very and product But in the we commodity already had suggested that cost reduction December, for back more a to our In that we'd that Yes. I higher level, be that would with we than expect activities, freight. prices, able Alex, believe, year. include

kind bit. of continues be to So of things But have up a staggered the as since the year. view. tariffs The our or hedging of Obviously, given come a the provided other freight, today. that to to little that areas we we'll and possibility kind part and contracts inflation in have activities move our around said reiterated we be date able seen as and of like guidance previously absorb we believe we've that raised the end

and was share guess, I medium-duty And on had here or question great. continue that higher. expectations last inflecting inflect if could Okay, the I

you dozen segment, fleet XXX XX heavy will couple sort of where out time. a year new of the pragmatic a or this a with and a over of in buy earlier mentioned You then start that might X,XXX, and They'll and whatever, approach couple then period play have product. of

these you they takes it sort before new some think medium-duty see the that inflection in way? that in Do the drive reflected should share it market it about market So do of Or sooner? that you deliberately possible do of market time operates? some is you think same share. products How the talking you're

Yes.

fact, place to then share, begin when to basically the country, a scheduled support flat market flattish And typically leasing period. fall of market as time second fleet One of X trucks trucks. their are So to us share, kind the when businesses. orders medium-duty of a only way, medium-duty the year, who pieces. you up of in handful large by all their and rental in every companies sold. handful, the basically of in They I begins pick basically for XX% there's to per delivery, builds think quarter see medium-duty up the take in it the that is, those buy And are and they

with These excited and new vehicle. about new these medium-duty total And the very also, customers basically are to algorithms. product of the very continue quality, the performance cost of significant make the operating and sophisticated all yesterday that inroads sophisticated launched in that we have interested customers customers. We these who attributes, keenly just very

So typically, appreciation of is gains kind the medium-duty through is and -- share deliveries.

for have quite a in the fact, And and a are market. known market there's time, is to have other lot the typically those buyers, dealers. that the handled the dealers new known through of customers Now coming some product our half of smaller and

the is, into cool that we've LT, is touched anticipated raise what the market vehicle. product made, and The handled integrating that the have of Horizon portion as real superior we the will characteristics second thing of that, changes bit basically much of around And so knowledge we as that by and the portions year now -- these little of medium-duty in is those people half how as the about will appreciate from a share seen we the earlier market this gain customers well. like the some are we're the program, took features well, of that and those

vehicle share every we this a in believe to fact, you So have and anything? have it. in that row, will, gains the that's new reason third support for Michael, year year market the do

can. I Yes, Troy, if

performance from a Of and government, course, well. couple significant do and biggest the gains we of making extremely such the we average. side in and and construction, utility of lease to the segments business well services as segment, look back beverage current is the also We're rental on when food whole years

a And in the medium-duty to segment. We're its will take enhancements, level. current product the the us MV is a our only leader of acceptance with higher product, So outstanding.

next comes of Our of line from Ann question the Duignan JPMorgan.

that's trade support that Troy, a you to go We over you be back ordering trade-in, a insofar thesis? actually capacity. I GDP you Are as customers and should would now fleets have seeing without a actually said, or your adding did something want X%. to seeing without which

can Hey, that's Michael, great that? question. a comment on you

a chain. many an LTs them. from trucks supply all the Not We are certainly, an issue trades sold a we growth. food is with from us having -- driver growth, Yes. hadn't But we is associated seeing of there. retail XXX they Yes, ordered the years, a that standpoint are in many, order And always fleet AXXs. wholesale to saw recently with from

purchase part no over it. The them There associated as fleet years. in was well It growing. first with their was of X as trades refreshing

new actually X that sales/ if X mean, don't sales, truck that used I the we or used this, ratio. you'll used me, to. years, Ann, and back that's you that would question following thesis question. that. support remember your the great of we're have We'll and I me be in up in a to we on And talk truck data information capacity. have I of nature Yes. go about actually front the truck now. But front of don't agree get I but adding statistic right just the

so point it a think growing I around important we're the with this LTs, especially is in actually that whether controversy the cycle, of at be growing, Yes, and there's not or very lot would valuable.

have makes give that right you don't it. case, it fact Yes, I now, anecdotally. sense that's to a But on but the we'll work

is fuels buses. those my those statistics any Okay, a ago could great. then a appreciate a gasoline versus will sense for versus will you that. with or on are And be year mix bus Again, mix on year and us you you'll follow-up fuel growth fuel from propane, the be of that the I the diesel, if Just where great. think or segment. share eventually? what as Any percent have school the of of now in today

up. Persio ask on it me come let start I'll and go then back wrap and Yes, that, to ahead

just as Gasoline the last X%. market. think you it think volumes, think year's I total and around probably propane, a reference, was around just if I I Yes, total Sure. take was of XX% gasoline it -- was

growing. but X, So and XX% between gasoline, the between propane

units unit a X,XXX on X,XXX you of year that out hand when market So market. talk that for is was gasoline, of about last having orders

no think to lot don't we where issues are seeing are the deal start and gasoline cold that a have they with states of fuel I into more So get cold in really to and willing customers availability. that more

I now applications. in maintained after think it's treatments to that same way the be than have complex on less diesel

performance feel be and products in is best we in far, the fuel get we that the a for now best considered. But not have market. the of are only significantly. that customer propane, growing same should reason best today on fuel the seeing that economy of can by in engine the any out platform. powertrain, marketplace there So good the gasoline combination we that And Actually,

growing, we envisioned it this and market. But it's are we XX% where the end. be we've seeing as as in the exactly know high that going to future, of could So don't

Okay. from big ignited versus my And compression gasoline just engineering propane ignition? and are memory. both spark

Yes.

correct. Yes,

Baudendistel question line is next Your of of Stifel. the Mike from

lead production Can out? to in you're talk the competition? having you You about are now come mentioned customers filling versus that your out the you just third you times are because far any too lead are times quarter. from competitors slots, your how And

touch Persio, on you to want that?

saw that added demand one in first, we Yes. and that we've December because Yes, think, done, I and to extended you Escobedo heard Well, coming, the in thing had shutdown we that the capacity us. sure. has

our in company of so for in protect volume. we journey could the are capacity the adding of So growth the we

produce better higher if minds, the and -- even supply that base new us that stay consistently news are. go check is always and market had, we've we So we industry really as products and been our because launch projects we more our share good and and drive made would in have flat that for the Horizon that would of the around a where ability the the consider to doing back us will

different is So in today, the are we which I than to very third not we think add. the out competition, but continue quarter

feel in even that we we of availability. there are terms Troy in rates to upside competitive As if are considering is line XXXX, But we some yes, and now said, XX% right that. in high we are

Michael, can that. So coming know just if us we you don't welcoming customers back know some And for we on I specific thoughts for place any order customers are have that today.

offer just that the great products is that that plus a think of top on I can have. we we

Yes, right. really, demand a with product. mind, hit on that, and Series the the I'd driver really starts mean, LT strong demand a for you're mentioned it the exactly we the target I earlier. product and in having Persio, for designed the We as with

of plus buy demand adding a that been don't. really to some at really, product. and cases, we're us, it's with others customers and want their a is production looking even for And combination due actually, that trucks product us. order availability they're we initially. had what we've is their fairly that of a the percent existing capacity more the -- order. has large now And for seeing already And In to others there's seeing, the having So -- customers got that got on we're

a in spot good we're now. So right

the Our next Cleveland Uhlman question Research. line comes of from Adam of

we model, we hoping the the savings? circling was year. I this think could next the and the truck remind model. us of to other of the then substitution the having start magnitude about the you new you're Could material balance outlook back cost medium-duty material And with presume as new if all earnings at I'd year to and maybe that's savings.

in Yes, or margin, I to HV our the a it improve things when the of as the be think mean, new product, LT, our of efforts the it the I one MV, great even part from HX, do benefits for you to MV, just products, in our in more benchmarking. gives contemporary do and extensive drifting efforts of regard and as us the an opportunity teardowns practices bring Such design that opportunities well. we

So than really say, share targets replaces. really comes market for to we level the don't basis suffice cost competitive that what to that. at the were MV product detail savings because cost different it it's But a the

sales you then could any how talk got year? Okay, changes been expectations Have And you're that? the about there for business profitability for you. Parts about and about thinking the

and in maybe as well. Michael want start, here No I'll to jump will real changes.

every the outs we run and Parts kind business. ins Parts to of are did said about bit few grow pace. more slow a those the over As a of off for And with overall been or Diamond that maybe at time a We've Parts quarter, to which what anticipated. continues private double-digit There But past. in business, to offset the Blue XX% we've our now it's about business. rates the at talked able first label little year. in we continues

opportunities line. see week to There this continue they're was there. announcements that of product business part where expanding we additional for the their So

We a strong that's we So lower anticipated is slightly to in Parts parts that Blue the due Proprietary to profitability. lower for I be did as the Parts remarks, in and business important minute indicated did things. business, three quarter. that's forward. really part the what of an profits going ago. continues we have our a One mentioned we they Diamond And driver think our

for charge second we overall. allocation Engineering slightly well. we higher which higher discussed ago as And have or a the we third is that do -- some There's there. Parts Second it's an segment the the freight of last cost, the the is, model as And part Parts hamper over and few getting -- results, doesn't that, a allocation Parts results overall shows additional in over given our strong of the but the they're as segment profitability growth an up which company. cost years,

continue for were look ins this There business But grow call. we versus our business time. no real change, where the Parts there. on Parts year to to So the and over quarterly in our view, some are outs we last for

a I just couple Yes, if that. of Walter, to points could add

sales parts crash product into truck share addition share well, expanding population or total engines is and brands, the volume. trucks now the our also proprietary maintenance parts parts line, to on it's coming sweet or the MaxxForce where to That's parts those our piece our cab. creating point from due to whether parts proprietary increase age. other additional we continue as relaunching of other head -- the market sales we're play the as into In getting are label to a private spot and And the

out So the there, get is our it better business. more for the we trucks Parts

from Fargo. of the Casey Andy next is Our Wells line of question

question a questions I ask NAFTA. couple wanted -- of a to around

of strong. constraints. demand Clearly, have competitors Some noted is your chain supply

specifically strength. indicated to so, chain if that truck affecting demand color And provide constraints you American can supply capacity your North internal meet on I'm pinch have if any production. wondering You've adequate the seeing any points? you you're

supply they've base, been and them. our with in few there's we've also disruption with even a got issues, product communications nothing while increase production. all minor us in We're been created had daily is Phil us that's great this really launches. with And our Christman. Yes, We've of right a recent to through

every think our go with what I from base. now, right So supply things we're seeing

something about for production extension production decision else? rates. are And there and a Okay. potential increase rate? backlog making talked Persio or with then the you earlier just What to is the current triggers bit Is that, upside, the the it little

health seeing for instance, Well, as triggers what this is the we we that, Troy opportunity. backlog an when Persio. our are division note, and XXXX Usually, of mentioned, also the represents the start that

and capacity we how decisions. those little Now and the add now that's can saying, bit sooner shift back, we production in are a make we okay,

is the really, the basis. decisions on So us on weekly of And raising backlog very health for rates. make a that instrumental line we to monitor

very really higher. I by yes, doing when decisions process robust internal looking at just make we say do where we capacity. think upside that, -- is have base. by there we So on that we And can said, that There production supply throughout to we the go even is as the don't Phil is that go a

and on on our the We take. suppliers. grow have raise line and we rates. people process the ground we We That's verify that then

our the on upon it orders, starts, and Persio housing goes, also as the view XXXX, noted, think, I dependent industrial we real us economy of is production, is where somewhat dependent as have Yes. whole thing of for next refine And is spending, think trigger, the I set mean, when a XXXX what will consumer we we looks that basically, look we view Andy, like. take your of at. stuff I But a to more point, refined be it

XXXX production know to lead that be I I is just view prevalent likely because lower you higher, it peak. that right And stands to kind think -- going do is -- don't there's you have based wondering, XXXX? your ask was give than on same as does And I fairly it's you I'm forecast. this an about to want Okay. and But or early now, me really views give of XXXX XXXX explicit

be XXXX year. We another will think strong

Okay, that future. in I'll to longer-term does just wondering, ask imply again the of alliance, upside mentioned then I'm And the the target? it VW on ahead you're plan. you potential

like does. I'd believe to that it

like far other, the exposed this say the us, put It's things same to so it difficult more and our would of to each becoming and some But Let would to alliance does. I me our just highlight detail we we're say that to why out partners thing. I has that well gone think like believe kind to for everybody, of so reason organizations is the don't frankly, separate kind are as of finding results, accounting more to of those. around part more quite the because do. And I'd

let you're shareholders, energy did more those. We out have account of to say, we're ahead and the think track original pull to continue continue I in are will the to to that our not those. schedule right to so probably benefits value our for on of seeing and me we the of of it. some kind ensure we'll kind of spend objectives And delivered this. we going to And and already So see forecast

going are ahead of initiatives. venture, of fill in schedule we'll purchasing as comes there's those. of then joint And stuff and the or behind to We be plan I to with -- additional get us, more kind that on it venture, ahead proceeding we think especially if

more same. change of fairly business, discipline. confident the But to not adding again, over it's way to a great the and run on going would level we I builds separate becomes difficult partners more of the every day, will excitement an it's from think mean, some say that now. value around I guidance the the this and our accounting I'm But just just to other be detail out the right it our us So little time, alliance. hand, a We're that, created. for

Our Fisher next is of question Steven from line UBS. of the

extent strengthens. follow of just on Just And such versus impact kind what I'm fleet in market demand the as the wanted on between the that power pricing? truck as of changing tightening the to positive buyers the manufacturer, to pricing. channel is is the new having up yourselves, balance how wondering a

go of probably in start I start go pricing, to area I Yes. so Well, macroeconomics, got Michael, that won't I've the ahead. Why couple a don't of those. with they're you on We'll thoughts just the expert. and --

like same It's the we're saying things.

or segment is segment, all in or are it's deals. manufacturers still certainly, truckload the always rental So competitive, or then the on all pricing municipal segment the leasing whether

a to So have I substitute the -- demand. just But to back there's for competitive it continues be environment. go no to

increased significantly to the sold have We customers XXX on or we've number year-over-year trucks of more a that basis.

unprecedented least piece was than that price we've the have had addition driver that fact, us to truck to I assure not every our uptime extremely done on The and day amount is along we the piece, a the a And customer's uptime. important uptime efficiency through And have alone. customer segment. operation. heavy dealer more fuel not an made the day with our decision on bought in and at worth In from of X,XXX is work $X,XXX our is of in terrific could customers, customers, improving a channel trucks our in customers you lot

pay when customer see product they the competitive the product a it firsthand It's an important performance, and big value. and that always now for all deals. gets down has a always the to factor. are the willingness again, price a competitors So preference market. is really in confidence But more All higher to a on little

is this so Troy. Yes,

huge uptime little has of the improve. expect and behalf on should not can of that easier that fuel as new cost that I'll Just there's the you fuel price there's right? view With improvements come us trucks improved Michael's my off X value customers areas, We're got increase price; year. interest, make in Michael price the to this continues residual we've we've just truck, just this, to last commented. be stuff on back. increase the residual economy there's And value. and behind a but in give and truck Basically, the upfront this working through for We we word our operating How took driver, price least, stick. our bit earlier building economy desirability now, and comments. for the to all is -- we the a improved there makes operating more on cost a

easier price as well does and the it And increased us for is easier so as what this demand makes makes market, stick. in this get it to it for it us consideration to

up feel that it's this deal-by-deal, how do where shelf. the a basis. in that's but it the I customization. are really market isn't very the has place before, off consumers and ends isn't buying mass trucks. are of production, week-by-week, said A -- customized what's This with goods today. mass kind month-by-month truck lot of price taking I've so this stuff to industry And These getting a priced. good people about

No, demand was it just basis environment industry's not overall to that logical ongoing an that, that has Or in that assume meet of to that lengthen the in better? backlog should that's on makes helpful. that pricing anymore? still I something logical get guess changed I everyone that the ability assumption out capacity, as is wondering, is there terms

year. think Well was so delivered was, And I in order the reasons in clear, more the a half lock-in then will one of be strong of starts orders. then trucks becomes next the prices second economic place through November that And discussion fact, it the in year. XXXX different if February as in that activity later that of round taking continues, obviously, why there's for the sets growth

huge those about and So to of think, market, right? And that -- in negotiations you've the throughout of I the come delivery of I think got a to latter mean, longer the the the there's enter again. always orders part about seasonality in for year number cycle think than into so it, you've we'll year, got a then next

key don't those in the typical discussions there back and walking for the I'd And is and to capacity deal that XXXX I to, timeframe. take place a to place September seen if was started taking past, know you kind watch about lock-them-in those like, so that in things enter the in took it's bigger or timeframe. July just we've much of One XXXX, what of it's negotiations into concern

the an sense? kind be So in the engagement in might units increases fleets timeframe be price manage new year. as Make of they one inside might into that as of things baseball, is seek following the particular, concerned how they their we'll about watching they and -- of, in larger fleets

in does. July. we'll sure follow That And be with up you to

this time, this to the And you. conclude conference management. over back at to like I'd does question-and-answer Thank the session. turn

early we we interest and forward June I when appreciate call. in Navistar, Thanks today's your participation chatting continued everybody's Well, to report our second quarter on for in numbers. look you with

Thanks all.

conclude and in participation for Ladies This conference. thank gentlemen, the your today's you does program.

great day. have You a may now Everyone, disconnect.